When
I pass away the bank will
take my home
Nope! Your home is part of your estate and will remain so upon death.
Your heirs can choose to convert the reverse mortgage to a standard
mortgage and keep the house, or they may choose to sell the home,
pay off the reverse mortgage, and keep the remaining equity. It's
their choice!
I
can't afford the monthly payments
Actually there are no monthly payments to make. The loan is not
paid back until the homeowner vacates the home.
I'm
not old enough to qualify
You only need to be 62 to qualify for a reverse mortgage.
I
won't qualify due to my poor credit
Credit history has nothing to do with qualifying for a reverse
mortgage. The main qualifications are your age, the equity in
your home (it should be paid off or close to it), and your home
must be your primary residence. However, if you are delinquent
on any Federal loans, you must use the equity from your reverse
mortgage to satisfy those first.
I'm
in bankruptcy so I won't qualify
Not necessarily so! You can use a reverse mortgage to get yourself
out of bankruptcy. The only stipulation is that if you are approved
for the program, you MUST use the money to discharge your bankruptcy.
The
interest rates are too high
The interest rates are generally much lower than a standard mortgage.
I
already have a mortgage so I won't qualify
Depending on the equity in your home, you may be able to use a
reverse mortgage to pay off your existing mortgage. In fact, depending
upon how much equity you have in the home, you may be able to
pay off your existing mortgage AND take out additional cash to
use in any manner you choose.
I
can't afford the up front costs
Not necessarily true! The costs associated with a reverse mortgage
are similar to those of a conventional mortgage. However, these
costs can be included within the loan, meaning you won't have
any out of pocket expenses.
I'll
end up owing more than my house is worth
Not true! Reverse mortgages contain a provision that your loan
amount will never exceed the value of your home.
I
defer my property taxes so I must already
have a reverse mortgage
While deferring your property taxes is similar to a reverse mortgage,
it is not the same. Both require the loan amount to be paid back
upon vacating the home. However, a reverse mortgage actually allows
you to tap into the additional equity in your home, over and above
the cost of the property tax. Reverse mortgages generally have
a much lower interest rate than those associated with a tax deferral
program.
Reverse
mortgages aren't safe
Not true! Since a reverse mortgage is a HUD program backed by
the Federal Government, reverse mortgages are very safe. FHA and
Fannie Mae guarantee the payments that are made to you. They also
guarantee you can stay in your home as long as you like.
If
I die, my spouse will be forced to leave the home
Not true! Your spouse is free to live in the home as long as they
like. The loan isn't required to be paid back until they vacate
the home.
If
I use a Reverse Mortgage to establish a Line of Credit, I must
begin making payments on the amount which I've used
Partly true. The Line of Credit must be paid back, but not immediately.
Just like the various other payment options, the Line of Credit
is only paid back once you vacate the home.
